Consider Each of the Items Below

question 147

Multiple Choice

Consider each of the items below. Place the proper letter in the blank space provided to indicate the nature of the account or accounts to be debited when recording each transaction using the preferred accounting treatment. Prepayments should be recorded in balance sheet accounts. Disregard income tax considerations unless instructed otherwise.
-Lambert Company recorded the first year’s interest on 6% $100,000 ten-year bonds sold a year ago at 94. The bonds were sold in order to finance the construction of a hydroelectric plant. Six months after the sale of the bonds, the construction of the hydroelectric plant was completed and operations were begun. (Only cash interest, and not discount amortization, is to be considered.)

• A)asset(s) only
• B)accumulated amortization, depletion, or depreciation only
• C)expense only
• D)asset(s) and expense
• E)some other account or combination of accounts

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Definitions:

Standards of Behavior

Established or accepted norms of conduct that individuals are expected to follow within a society or organization.

Moral Minimum

The minimum degree of ethical behavior expected of a business firm, which is usually defined as compliance with the law.

Ethical Behavior

The practice of conducting oneself according to an accepted set of moral principles, often in a professional context.

Firm

Another term for a business or company, often used in legal or formal contexts.